Random Flashcards
Closing Entries
- Close Expenses
- Close Revenues
- Close Income Summary
- Close Drawings
TSX stands for?
Toronto Stock Exchange
When is perpetual Inventory updated?
As product is sold
When is periodic Inventory updated?
At the end of an accounting period
Explain 2/10, n/30
A 2% discount is available if payment is made within 10 days. The entire amount is due within 30 days.
List two limitations of a good internal control system
- Collusion among employees
2. Carelessness by an employee
Define Fraud
A deliberate misrepresentation of facts with the intent of deceit
What is the last step of an audit?
An Auditor’s Report is issued expressing the opinion of the auditor(s) as to the fairness of the financial statements.
What companies must be audited?
Public companies must be audited once a year before the statements are made public to its shareholders.
What is the name of the contra account that represents uncollectable accounts receivables?
Allowance for Doubtful Accounts
What company would be permitted to use the direct write off method for uncollectables?
When most of the sales are for cash; Uncollectibles will not have a material affect; There are usually few if any uncollectibles
What one word describes the difference between an accounts receivables and notes receivables?
Interest—Notes Receivables are an interest-bearing asset. A/Rs are not.
The loss of an A/R becomes…
An expense
Classification of Allowance for Doubtful Accounts
Contra Asset
Classification of Sales Returns and Allowances
Contra Revenue
Classification of Purchases
Cost
Classification of Freight-In
Cost
Classification of Machinery
Asset
Classification of Transportation
Expense
Classification of Notes Receivables
Current Asset
Classification of Goodwill
Capital Asset
Classification of Land
Capital/Fixed Asset
Classification of Capital Stock
Shareholders’ Equity
Classification of Interest Earned
Revenue
Classification of Land used for extracting oil
Capital Asset
Classification of Retained Earnings
Shareholders’ Equity
Specific Identification
Actual cost of individual units is known
Last In First Out
The last units purchased are the first units sold
First In First Out
The first units purchased are the first units sold
Average Cost
Inventory values are assigned the same per-unit cost (old and new)
What type of asset is associated with Depreciation?
Fixed Asset (Plant and Equipment)
What type of asset is associated with Amortization?
Capital Asset (Goodwill)
What is the maximum number of years an Intangible Asset (Capital Asset) can be amortized over?
40 years
In a partnership explain Limited and Unlimited Liability.
- Limited Liability—limited partners are investors and do not usually participate in the management of the business. They are limited to the amount of their investment within the business.
- Unlimited Liability—All partnerships must have one general partner who has unlimited liability—Unlimited partners are personally responsible for all of the debts incurred by the firm.
Are partnerships required to pay income tax—explain.
No—Partners pay personal income tax on their share of the net income of the partnership.
Contributed Capital refers to …
Capital Stock or ownership by shareholders.
What account is used to represent the net income of a corporation that is left in the company?
Retained Earnings
